In Simple Words
It is easy to imagine that your bitcoin are stored inside your phone or wallet, like a file inside an app.
In reality, your bitcoin exist on the Bitcoin network.
Your wallet does not hold the bitcoin themselves. It holds your keys, which give you access to them.
Your keys prove that you can spend the bitcoin you control.
If you lose your keys, you lose access to your bitcoin. In simple words: your bitcoin are on the network, and your keys are in your wallet.